Agricultural product wholesale markets see declining performance and fall into operational difficulties
As economic growth slows, China's agricultural product wholesale market industry is also facing the difficulties of declining transaction volumes and falling profits, with a small number of markets even shutting down. Industry insiders point out that market pressure has provided domestic agricultural product wholesale markets with an opportunity for transformation and upgrading. Brand chains, "Internet plus market" and international trade are the three major directions for transformation and breakthrough, and the agricultural product wholesale market industry is ushering in the 3.0 era of modernization and upgrading.
At the recently held "8th China International Agricultural Trade Matchmaking Conference and 2015 China International Green Ecological Health Food Expo," data released by the China Agricultural Wholesale Markets Association show that as of the end of 2014, there were 4,512 agricultural product wholesale markets nationwide, with total annual transactions of 3,978.53 billion yuan, up 6 percent year on year; total annual transaction volume was 774.823 million tons, down nearly 0.9 percent year on year.
"The wholesale market industry is highly open. During the years of rapid economic development, a large amount of capital entered this field. Coupled with a lack of planning, incomplete laws and regulations, and blind investment attraction by some local governments, this led to severe overinvestment in the industry and intensified vicious competition. These accumulated contradictions have become even more prominent as downward pressure on the economy increases," Ma Zengjun, president of the China Agricultural Wholesale Markets Association, told Xinhua reporters.
⟦NL> Reporters learned through interviews that in recent years, vicious competition in the wholesale market industry has been very common, with similar situations occurring in Wuhan, Chengdu, Xi'an, Shenyang, Harbin and other places. A small number of wholesale markets have adopted methods such as exempting dealers from rent and commissions, providing cash subsidies, and setting up checkpoints to intercept goods, engaging in vicious competition that has caused fluctuations in local wholesale market transactions and pushed up agricultural product prices.
Before old contradictions are resolved, new challenges are already "at the city gates." According to industry insiders, in recent years, due to the implementation of anti-corruption policies, transaction volumes at some markets dealing in high-end fresh agricultural products have fallen sharply, and the rise of agricultural product e-commerce has also brought shocks to physical markets.
"Agricultural product e-commerce does not profit from the transactions themselves, but obtains investment from third parties to sustain operations. It has overturned the original wholesale transaction model and rapidly captured the market, bringing pressure on physical enterprises," Ma Zengjun said.
Liu Zhiren, a counselor of the State Council and a researcher at the Ministry of Agriculture's Rural Economic Research Center, pointed out that China's wholesale market industry has "shortcomings" such as insufficient understanding of the new economic situation, insufficient ability to grasp the situation, and insufficient motivation for industrial innovation, and urgently needs transformation and upgrading.
Ma Zengjun believes that the wholesale market industry must sprint into the 3.0 era. The first generation of wholesale markets was characterized by "enclosing land, enclosing courtyards, and building walls," with inadequate hardware facilities. Although the second generation of wholesale markets basically had adequate hardware facilities, their functions were not fully developed. The third generation of wholesale markets is a modern market with advanced facilities, complete functions, scientific management, and a proactive assumption of social responsibility.
Liu Zhiren believes that during the "13th Five-Year Plan" period, consumption upgrading will bring major opportunities to China's agricultural product circulation industry. Agricultural product wholesale markets should study new trends in consumption upgrading, create corporate brands, and take the path of group-based and chain operations.
In fact, in recent years, the trend toward branding and group-based development in the agricultural product wholesale market industry has become increasingly obvious. Currently, the company with the largest number of developments is Shenzhen Agricultural Products Co., Ltd., which already has more than 30 markets in various places.
Industry insiders believe that agricultural products are the new hotspot after the three major e-commerce hotspots of books, clothing and 3C, and e-commerce will play an increasingly important role in agricultural product circulation.
Reporters learned that domestic wholesale market enterprises have basically all "gone online" now, with some doing platform e-commerce and others doing operational e-commerce. Although there are not yet any successful cases to speak of, all are actively exploring new business formats.
Sun Yujiao, general manager of the Jilin City Grain and Oil Wholesale Market, told reporters that the market has built a unified Jilin grain and oil specialty products website for dealers, directly selling local specialty agricultural products such as soybean oil and japonica rice tribute rice to consumers. "A lot of the direct supply that some e-commerce companies advertise is actually sourced from wholesale markets, because the goods here are the most complete and the prices are cheap. Rather than this, it would be better to use the market as a product base and do e-commerce ourselves," Sun Yujiao said.
Some physical wholesale markets have also begun trying to expand into international markets with the help of the "Belt and Road" strategy and multilateral and bilateral trade arrangements. For example, Huo Jianguo, former president of the Ministry of Commerce's International Trade Research Institute, suggested that Chinese agricultural product wholesale market enterprises can study the arrangements under the upgraded version of the China-ASEAN Free Trade Area, make full use of policies such as zero tariffs, and proactively connect with wholesale markets or buyers in the ASEAN region to realize trade in each side's competitive agricultural products.
"Building the international trade platform function of wholesale markets can form an international agricultural product price center and enhance the bargaining power of domestic agricultural products," Ma Zengjun said.